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TMI Blog2009 (12) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... rate prescribed in article 18, read with article 23, of Schedule I to the Stamp Act, in the case of a certificate of sale or at the rate prescribed in article 23 in the case of a sale deed. The Official Liquidator shall also put the auction purchaser on notice that if they do not pay stamp duty and do not choose to have the document registered, it may become inadmissible in evidence, in view of section 35 of the Stamp Act and section 49 of the Registration Act. Henceforth, the Official Liquidator shall also indicate in the tender notifications and forms that necessary stamp duty is payable as per the provisions of article 18, read with article 23, of Schedule I to the Stamp Act. - COMPANY APPLICATION NO. 1928 OF 2009 - - - Dated:- 23-12-2009 - V. RAMASUBRAMANIAN, J. M. Jayakumar for the Applicant. JUDGMENT 1. This is an application filed by the Official Liquidator, seeking by way of general directions, a clarification as to whether he must execute a sale deed or a certificate of sale, as and when the property of a company in liquidation, is brought to sale in public auction. 2. Heard Mr. M. Jayakumar, learned deputy Official Liquidator. 3. In normal c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature should take note of the loophole in the law and plug it by necessary amendments. 7. But the question as to whether stamp duty is payable on a certificate of sale, was not examined in Shree Vijayalakshmi Charitable Trust, on a comparative analysis of all the provisions of the Transfer of Property Act, 1882, the Indian Stamp Act, 1899 and the Indian Registration Act, 1908, and the issues of repugnancy and overriding effect of one Act over the other. Moreover, the question as to whether the stamp duty was payable on a certificate of sale or not, was not decided either by the Supreme Court in B. Arvind Kumar s case ( supra ) or by the Division Bench in K. Chidambara Manickam s case ( supra ). In any event, in B. Arvind Kumar s case( supra ), the Supreme Court was concerned with a certificate of sale issued by the official assignee, who stands on a different footing than the Official Liquidator. Similarly, in K. Chidambara Manickam s case ( supra ), the Division Bench was concerned with a certificate of sale issued by the authorised officer of a bank, in exercise of the power conferred under the SARFAESI Act, 2002. Therefore, neither the decision in B. Arvind Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transfer of Property Act, 1882, are grouped under Chapter III, under the heading "Of sales of immovable property". Section 54 of the Transfer of Property Act, 1882, provides ( i ) the definition of the word "sale" ( ii ) the manner in which a sale may be made and ( iii ) what a contract for sale of immovable property is. It requires reproduction, for busting the bubble. It reads as follows : "54. Sale defined. Sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Sale how made. Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Contract for sale. A contract for the sale of immovable property is a contract that a sale of such property shall t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd paragraph of section 54 requiring every sale of tangible immovable property for a value of rupees one hundred and above to be made only by a registered instrument, is applicable only in places where the Indian Registration Act itself is applicable and not otherwise. Therefore, it follows as a corollary that paragraph 2 of section 54 of the Transfer of Property Act took note of the provisions of the Indian Registration Act, 1908, including section 17(2)( xii ) of the said Act. Otherwise, even while excluding under section 1, the areas to which paragraph 2 of section 54 will not apply, the law makers could have excluded the instruments which did not require compulsory registration in view of section 17(2) of the Registration Act also. 14. Though section 54 of the Transfer of Property Act, 1882, made it compulsory for every sale of tangible immovable property valued at Rs. 100 and more, to be made only by a registered instrument, the Act does not spell out the consequences of the failure to do so. While section 35 of the Indian Stamp Act makes an instrument not duly stamped and section 49 of the Registration Act makes a document not duly registered, inadmissible in evidence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I of the Specific Relief Act, 1877, or as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877, or as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882, or as evidence of any collateral transaction not required to be affected by registered instrument." 19. (By a further amendment by Act 48 of 2001, a portion of the proviso was deleted. The deleted portion would read as "or as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877, or as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882"). 20. The effect of the 1929 Amendment to both the Transfer of Property Act and the Indian Registration Act, came up for consideration before a three-member Bench of the Apex Court in Raghunath v. Kedar Nath [1969] 1 SCC 497, and the Court held as follows : "The inclusion of the words by any provision of the Transfer of Property Act, 1882 , by the Amending Act, 1929, settled a doubt entertained as to whether the documents of which the registration was comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have seen above, the second part of section 54 of the Transfer of Property Act makes every transfer of tangible immovable property of the value of Rs. 100 and above, to be made only by a registered instrument. However, section 2( d ) of the Transfer of Property Act, declares that nothing contained in the Act, shall be deemed to affect any transfer by operation of law or by or in execution of a decree or order of a court of competent jurisdiction. 23. Therefore, the prescription in the second paragraph of section 54 of the Transfer of Property Act (that a sale is to be only by a registered instrument) may not be applicable to ( i ) a sale by operation of law, and ( ii ) a sale by or in execution of a decree or order of a court of competent jurisdiction. 24. Way back in Pinnamameni Basava Sankaran v. Garapati Narasimhulu AIR 1927 Mad. 1, a Full Bench of this Court (five-member Bench), with Krishnan, J ., dissenting, held that a sale by the Official Receiver acting under the provisions of the Provincial Insolvency Act, 1920 is not a transfer of property by operation of law or by or in execution of a decree or order of a court of competent jurisdiction. Though the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty of an insolvent is neither selling it in execution of a decree of a Court nor could it amount to a sale by a civil officer within the meaning of section 89 of the Registration Act, another Division Bench took a view, which at first blush, may appear to be different. It was in S. Arumugham v. C. K. Venugopal Chettiar [1994] 1 LW 491. In that case, it was held by the Division Bench that an order passed by the Judge of an Insolvency Court (marked in that case as exhibit D7) annulling the adjudication and directing the official assignee to transfer to the guarantor, the assets of the insolvent that were in excess, was held to be a transfer by order of Court. After holding so, the Division Bench held in paragraph 18 of its judgment that exhibit D7 did not require registration under section 54 of the Transfer of Property Act, since section 2( d ) of the Act exempted transfers by orders of Court from the purview of the Act. Though the Division Bench made a reference in paragraphs 20 and 22 of its decision to the decision of the Full Bench in Pinnamameni Basava Sankaran s case ( supra ), it appears that the Division Bench was inclined to take the view that it did, on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exception under section 2( d ) of the Transfer of Property Act. If it would not fall within the parameters of section 2( d ), then the second paragraph of section 54 of the Transfer of Property Act, requiring every sale of tangible immovable property for Rs. 100 and more to be made only by a registered instrument, would automatically apply. Therefore, the sale has to comply with the statutory requirement under the second paragraph of section 54. From the perspective of the Indian Stamp Act, 1899 : 29. Having considered the provisions of the Transfer of Property Act, now let me move on to the provisions of the Indian Stamp Act, 1899. In that Act, section 3 is the charging section which provides the list of instruments chargeable to duty. It reads as follows : "3. Instruments chargeable with duty. Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefor respectively, that is to say : ( a )every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in favour of, the Government in case where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument; (2)any instrument for the sale, transfer or other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in any ship or vessel registered under the Merchant Shipping Act, 1894 or under Act XIX of 1838, or the Indian Registration of Ships Act, 1841 (X of 1841), as amended by subsequent Acts." 30. A careful reading of the charging section 3 shows that every instrument about which a mention is made in Schedule I to the Act, is chargeable with duty indicated therein. The last proviso to section 3 makes only two exceptions to the general liability imposed by the section. The first exception is in respect of any instrument executed by or on behalf of or in favour of the Government. The second exception is in relation to an instrument for the sale or transfer of any ship or vessel, etc. 31. Therefore, all instruments, except those covered by the last proviso to section 3 are chargeable with duty indicated in Schedule I, if the instrument is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct-matter of conveyance." 36. Therefore, by virtue of the provisions of the Indian Stamp Act, 1899, a certificate of sale issued by a Revenue or civil court or Collector or revenue officer is chargeable with duty prescribed in article 18 under Schedule I. A deed of conveyance, whether titled as a "deed of sale" or otherwise, is chargeable with duty prescribed in article 23. A combined reading of articles 18 and 23 would show that if the purchase money of a property sold by public auction exceeds Rs. 50 the same duty is payable, irrespective of whether it is a certificate of sale or a deed of conveyance/sale. The person by whom such duty is payable is also spelt out in section 29( f ) of the Act, leaving no room for any doubt that stamp duty is certainly payable even on a certificate of sale. 37. Section 35 of the Indian Stamp Act, makes it clear that no instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties, authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped. The proviso to secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property : Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees. (1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882), shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and, if such documents are not registered on or after such commencement, then they shall have no effect for the purposes of the said section 53A. (2) Nothing in clauses ( b ) and ( c ) of sub-section (1) applies to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation. A document purporting or operating to effect a contract for the sale of immovable property shall not be deemed to require or ever to have required registration by reason only of the fact that such document contains a recital of the payment of any earnest money or of the whole or any part of the purchase money. (3) Authorities to adopt a son, executed after the first day of January, 1872, and not conferred by a will, shall also be registered." 39. While section 17(1) deals with documents which require registration compulsorily and sub-section (2) thereunder lists the exceptions thereto, section 18 of the Indian Registration Act deals with documents which could be registered at the option of the parties. It reads as follows : "18. Any of the following documents may be registered under this Act, namely: ( a )instruments (other than instruments of gift and wills) which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of a value less than one hundred rupees, to or in immovable property ; ( b )instruments acknowledging the receipt or payment of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 of the Transfer of Property Act, ( ii ) section 3, read with articles 18 and 23 under Schedule I to the Indian Stamp Act, and ( iii ) sections 17(2)( xii ), 18, 49 and 89 of the Registration Act, would show : ( i )that every certificate of sale should be duly stamped ; and ( ii )that despite the registration of the same being optional, it is not admissible in evidence under section 35 of the Stamp Act and section 49 of the Registration Act, unless it is duly stamped and registered, in view of the law laid down by the three-member Bench of the Apex Court in Raghunath s case ( supra ). 42. Having seen the statutory provisions in all the three Acts, let me now turn to the decision in B. Arvind Kumar s case ( supra ), which forms the basis for the decision in Shree Vijayalakshmi Charitable Trust s case ( supra ). One of the questions that arose for consideration in B. Arvind Kumar s case ( supra ) (as seen from paragraph 8 of the judgment), was whether the plaintiff s father did not secure any right in the suit property, as the sale certificate in his favour was not followed by a registered deed of transfer. In paragraph 12 of the said judgment, the Supreme Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the official receiver, after the owner of the superstructure was adjudicated as insolvent. The land had earlier been granted by way of lease in perpetuity to the insolvent, by the military authorities. After several years of the issue of the sale certificate by the official receiver and after the death of the father of the appellant, the military authorities dispossessed him forcibly. Therefore, he filed a suit for declaration and for recovery of possession of the property. Though the trial court rejected the prayer for declaration of title, it ordered delivery of possession. On appeal by the defence authorities, the High Court reversed the decree of the trial court and dismissed the suit. Among other things, the reasoning given by the High Court of Karnataka in that case was that the sale certificate issued in favour of the plaintiff s father was not followed by a registered instrument transferring the lessee s interest and that consequently no title was conveyed in the suit land to the plaintiff s father. It is in that context that when the matter was taken to the Supreme Court by the plaintiff, the Supreme Court held on issue No. 2 as extracted above. 44. A perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that order, to the Registering Officer within the local limits of whose jurisdiction the whole or any part of the property so mortgaged is situate, and such Registering Officer shall file the copy or copies, as the case may be, in his Book No. 1. (4) Every revenue officer granting a certificate of sale to the purchaser of immovable property sold by public auction shall send a copy of the certificate to the Registering Officer within the local limits of whose jurisdiction the whole or any part of the property comprised in the certificate is situate, and such officer shall file the copy in his Book No. 1." 46. In its application to the State of Tamil Nadu, section 89 has been amended to include three sub-sections, viz ., sub-sections (5), (6) and (7). Similarly, by a State Amendment, section 89A has been inserted/empowering the Government to make rules for filing copies of documents. By section 89A(2A), every Court passing an order effecting or raising an attachment of immovable property, should communicate a copy giving details of the property and the Registering Officer is obliged to file the same in Book I. The Registering Officer is, thus, obliged to perform a crucial r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt or a revenue officer, a copy of such certificate is to be sent to the Registering Officer within the local limits of whose jurisdiction, the property is situate. Upon receipt of the copy of the certificate of sale, the Registering Officer shall file the copy in his Book No. 1. Therefore, the Court held on issue No. 1 that when a copy of the certificate of sale is received by a Registering Officer, he should act in terms of section 89(4) and file the same in Book No. 1. 50. The second question as framed for consideration by the Supreme Court in Shanti Devi L. Singh s case ( supra ), in paragraph 5 of its decision was slightly different from the second question actually taken up for consideration in paragraph 7. It was whether the filing of the copy of the certificate of sale in Book No. 1 within the meaning of section 89 tantamounted to the registration of the document under the Registration Act or whether the concept of filing a copy of the certificate of sale in Book No. 1 was different from the concept of registration. On this aspect, the Supreme Court found that the registration of a document under the Act is conditional on the fulfilment of several requirements laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file the copy of the certificate in Book No. 1 and not to copy out the certificate or make any other entries in Book No. 1. This, in the opinion of the Court, would be sufficient to put an intending purchaser of the very same property, on notice of the auction sale conducted by the Court or revenue. 53. After answering the modified second issue as above, the Supreme Court took up for consideration another question in paragraph 10 of its decision. This question was whether the certificate of sale was liable to stamp duty and if so, what the consequences were. On this question, even at the threshold, the Court upheld the view of the Delhi High Court, with reference to sections 3 and 29( f ), read with article 18 under Schedule I of the Stamp Act, that in the case of a certificate of sale, necessary stamp duty is to be paid by the auction purchaser, unless by a contract to the contrary, the liability is shifted to the Government. After giving a preliminary finding to the said effect in paragraph 10 of its judgment, the Apex Court made certain important observations in paragraph 11. Therefore, it is reproduced as follows : "There are two provisions in the Stamp Act which provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 33 of the Stamp Act, a court or authority will also have the power to impound the document, as and when produced as a piece of evidence and that it shall not admit the document in evidence, unless the stamp duty chargeable and the stipulated penalty are paid. 55. After steering clear of the doubt with regard to the liability to pay stamp duty even on a certificate of sale, the Supreme Court took up for consideration in paragraph 12 of its decision, the question as to whether the Sub-Registrar has no jurisdiction to refuse registration, on the ground that the document (certificate of sale) is insufficiently stamped. On this issue, the Court held as follows : "We should, however, like to deal with a contention raised in the grounds that even if the certificate of registration is sought to be presented for registration by the petitioners, the Sub-Registrar has no jurisdiction to refuse registration on the ground that the document is insufficiently stamped. As already pointed out, section 17(2)( xii ) of the Registration Act makes it clear that the certificate of sale issued in a Court sale or by a revenue officer does not need registration. (Though this provision, like se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistrar is obliged to shut his eyes to the provisions of the Stamp Act, merely because of the obligations imposed under section 89(2) and (4) of the Act. 58. What then is the role played by the Registering Officer under section 89 of the Registration Act ? To find an answer to this question, we may have to have a bird s eye view of the provisions of several other statutes. 59. There are provisions in very many fiscal statutes, creating a charge on the properties of the assessees, who commit default in payment of a variety of taxes. For instance, the Tamil Nadu General Sales Tax Act, 1959 creates a charge under section 24(2). The charge so created, can be communicated by the concerned Assessing Officer to the Sub-Registrar of the area within whose jurisdiction the property is situate. The Sub-Registrar is obliged to make necessary entries in his books in order to enable persons who propose to deal with the properties, to have notice of the encumbrances so created on the property. Similarly, as per the Madras Amendment, an order of attachment before judgment passed under the Order 38, rules 5 and 6 of the CPC are also to be communicated to the Sub-Registrar under rule 11B. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-applicability of the requirement of compulsory registration to a certificate of sale, in view of section 17(2)( xii ) of the Registration Act, cannot be construed to mean that the requirement to pay stamp duty is also dispensed with. Such an interpretation would lead to a disastrous conclusion that section 17(2) of the Registration Act, overrides: ( a )section 3, read with articles 18 and 23 of Schedule I of the Indian Stamp Act ; and ( b )paragraph 2 of section 54 of the Transfer of Property Act, 1882. 63. As stated earlier, there is not even a non obstante clause in section 17(2) of the Registration Act. Therefore, section 17(2) cannot be taken to exclude the operation of the provisions of the Stamp Act and the Transfer of Property Act, insofar as certificates of sale are concerned. On the other hand, it was by the Transfer of Property (Amendment) Supplementary Act, 1929 (Act 21 of 1929), that both section 4 of the Transfer of Property Act and section 49 of the Registration Act were amended. 64. There is one more crucial issue. Section 17(2)( xii ) refers only to a certificate of sale granted to the purchaser of a property in public auction by a civil or revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the context of "civilians" as opposed to persons in military service. It is doubtful, if an Official Liquidator can be equated to a civil officer or a revenue officer, so as to make the certificate of sale issued by him come within the purview of section 17(2)( xii ) of the Registration Act, 1908. I do not think that an Official Liquidator can be considered to be a "revenue officer" within the meaning of section 89(4) since he is not collecting revenue for the Government. Even assuming for the sake of argument that he can be equated, article 18, under Schedule I of the Indian Stamp Act makes a certificate of sale issued by a revenue officer also liable to stamp duty. The term "revenue officer" appearing both in article 18 under Schedule I of the Indian Stamp Act and also in sections 17(2)( xii ) and 89(4) of the Registration Act, are to be given the same meaning and to be construed to indicate the same person. 67. Therefore, the only conclusion that one can draw by a combined reading of the provisions of the Transfer of Property Act, 1882, the Indian Stamp Act, 1899 and the Registration Act, 1908 is that by whatever name the instrument is called (whether certificate of sale or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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